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May 26, 2025
The CIBIL Score of an individual has become a universal requirement for issuing all kinds of credit. A Credit Score of 720 to 750 Points is a stepping stone to receiving secure and unsecured credit, such as a mortgage, Personal Loan, and a Credit Card. Though a CIBIL Score has become popular as a benchmark, your credit history or CIBIL Record is equally or more important, as it is the basis for calculating your CIBIL Score. There could be a situation where the CIBIL Score is around 730, but the request for a Personal Loan is declined due to aberrations in the credit history. Analysing the CIBIL Report vs Credit Score will help us further understand the functions and implications.
A CIBIL Score is a numeric value issued to an individual by CIBIL (The Credit Bureau of India Ltd), signifying the individual’s creditworthiness. The score value ranges from 300 to 900 points and is issued based on the following:
Banks require a CIBIL Score of 750+ points to issue a Personal Loan, though the CIBIL Score must meet the requisite benchmark both the CIBIL Score and CIBIL or Credit History are checked before issuing a Personal Loan.
The Transunion CIBIL (Credit Bureau of India Ltd) commenced operations in India in 2007. It was the first credit agency to initiate the recording and maintenance of individuals’ and companies’ credit usage. Credit issuing organisations, including banks, NBFCs, and finance companies, forward data on credit issuance and repayment on an ongoing basis to CIBIL.
The CIBIL, in turn, maintains an exhaustive record under the customer profile specifications. Upon inquiry, this data is shared with Banks whenever a customer requests a credit.
So, ever since it started operations, your credit history, whether taken as a Loan or a Credit Card, and the number of times you applied for credit are included under the profile created and the control number issued. A Credit Report or history is updated within a week or fifteen days after a lender reports a credit activity. A CIBIL History contains the following information:
Implications:- The EMI being paid and the outstanding Credit Card balances are taken into account when calculating the financial eligibility for an additional loan amount. The applicant’s existing obligations, net salary, and company category according to the Approved List of Companies are the main factors used to determine Personal Loan Eligibility.
Implications:- The closed accounts reflected in the applicant’s CIBIL History are evidence of adept financial management and add value to the Credit Score. The length of the account is also significant as it certifies that the user has been able to maintain a steady repayment schedule. A financer with credit that a customer has successfully used will be ready to issue further credit when required.
Implications:- A pending account is akin to a thorn in the flesh the amount will accrue interest until it is fully paid, adversely affecting the CIBIL Score. If there is a dispute or an incorrect entry in CIBIL, the customer can bring the matter to attention and seek clarification. The applicant must settle the outstanding dues before any credit can be granted.
Implications:- According to CIBIL, a written-off or settled account is regarded as a negative remark, resulting in a dip in the score, and the customer will not be granted further credit. Customers may have the misconception that paying the original amount and availing themselves of a settlement option will help alleviate the pressure and clear the debt however, this is not the case. A settlement will only offer relief from collection agents, but the CIBIL is marred forever.
Implications:- A payment delay due to a shortage of funds or an oversight cannot be mitigated and is always reflected in the CIBIL History. An infrequent delay in payments is overlooked, but a continuous string of delays will affect the CIBIL Score and give the impression that the applicant is not vigilant about paying dues on time.
Implications:- Banks and NBFCs must send customer data to CIBIL every fortnight. If the CIBIL Report indicates that the applicant has made multiple queries quickly, the Credit Score decreases by 10 to 15 points with each inquiry. Banks are also wary of extending credit to customers who may seek funding from multiple institutions and struggle with repayment. Your application for an ICICI Credit Card is declined if there are more than five enquiries reflected in your CIBIL, and your Personal Loan Application to HDFC Bank can get rejected due to multiple enquiries. Therefore, please do not apply to too many lenders simultaneously, as it can hamper your credit standing and give a wrong impression to the lender.
Banks will examine your credit history to gauge your credit management skills. This may surprise many who applied for a home loan a decade ago or briefly used a Credit Card without notifying the lender of their discontinuation of its use. There may be outstanding dues reflected in the account that could be a deterrent. A CIBIL Score above 730 points can initiate your Personal Loan Process, but a valid explanation is required if there are any irregularities in your credit history.
CIBIL History:- Your credit report or history, which lenders review, includes all credit usage from when you first acquired credit to the present. Once an entry is made, it cannot be altered or removed unless the lender updates it or there is an error in the Credit Report that is corrected.
Credit Score:- Your Credit Score is reassessed based on constant usage and the corresponding entries in your CIBIL record. It will increase or decrease according to the individual’s credit behaviour. For instance, if you limit your Credit Card usage and do not utilise any other form of credit, your Credit Score will remain steady. However, your score will change if you Apply for a Loan or resume using your Credit Card while making timely payments.
CIBIL History:- Your Credit History features years of credit usage, including repayment tracks and current credit. As per the recent Reserve Bank of India directive, Banks will now consider a credit history of 5 years instead of 7 as was previously done for the issuance of further credit.
CIBIL Score:- Your Credit Ratings will improve with credit usage. If you are a current credit user with a good mix of unsecured and secured credit, your CIBIL Score goes up accordingly. In contrast, if there is a delayed payment or current bounce in your record, the CIBIL Score will immediately reflect the same.
Credit History:- Your Credit History shows the EMI you are paying for all your existing loans and Credit Cards. If your credit card balance is unpaid more than your monthly income, and the total EMI you are paying will exhaust more than 60% of your income, your request for further credit is rejected due to being overleveraged.
CIBIL Score:- If you are paying the EMI for your loan on time and the minimum due on your Credit Card Bills, your CIBIL Score will not dip unless you apply for credit several times, and the credit inquiries reflect in your CIBIL History.
Today, lenders are delving into the applicant’s credit history to examine past credit dealings before issuing a Personal Loan. It is a good idea to solve past situations when your obligations could not be fulfilled due to financial shortages, as banks remain open to negotiation. If there have been delays due to unusual circumstances, as in the case during COVID, when many faced a financial crunch due to loss of employment, a leeway can be given. Otherwise, making amends by clearing outstanding dues will stand you in good stead.
Check Your CIBIL Score and credit history regularly, as you are entitled to a free Credit Score and a Credit Report from CIBIL. A CIBIL Score above 750 points signifies healthy credit usage. It is the benchmark used by lenders as a scoring model and gives applicants the indication that their finances are in good shape.
Our past credit dealings are a window into your future credit behaviour. Therefore, a sound credit history will help you obtain credit easily when required at the lowest interest rate, the most suitable terms, and an optimum CIBIL Score.
